My oldest son turned 18 this month and is about to start his first year of college in Aug. He has a job, a car that is paid for and easily makes enough to cover insurance, however we decided that it was time to give him a chance to build a credit history. We decided to add him to our credit card. As he is going to college locally and living at home it won’t be a problem to keep an eye on what is charged.
Well less that 24 hours after his card arrived the offers started coming in for more:
And when you DO use the Card there are NO Interest Charges–that’s 0% APR—on ALL your purchases up to $250, so long as you check your Billing Statements each month and make at least the Minimum Payments Due by the Payment Due Dates, and keep the balance on your account below your credit limit.
Sounds pretty good especially when you figure no annual fees, but think about it…
It’s really easy to get a card over $250 for a total balance. That is a max of about $60 a week. Pretty easy to even briefly go over that and once you do….
…the base rate goes to 19.95% as a minimum with the rate being equal to the highest rate published in the Wall Street Journal within a 3 month period plus 10.5%. And if you are late on a payment then you add 20.99% to the rate with a minimum of 25.99%. (not counting fees).
If you are a real careful teenager then you might manage to do OK, but how many real careful teenagers are there. This is a suckers bet, and I’ll wager a ton of teens and their parents fall for it.